Canada, US Trade War Looms Over US Country of Origin Labels

'Despite consistent rulings by the World Trade Organization, the U.S. government continues its unfair trade practices, which are severely damaging to Canadian industry and jobs,' said Canada Trade Minister Ed Fast.

OTTAWA -- Canada threatened Friday to slap duties on a multitude of U.S. goods including tomato ketchup, bed mattresses and swivel seats in a labels spat with its main trading partner.

Trade Minister Ed Fast said he would seek World Trade Organization (WTO) approval for the retaliatory measures against the United States, which could take up to 18-24 months.

Washington acknowledged the move, but downplayed the likelihood of this escalating into a trade war.

"As we have said from the outset, the USDA (US Department of Agriculture)'s new final rule brings the United States into compliance, and therefore no retaliation should be authorized" by the WTO, a spokeswoman for the United States Trade Representative said.

The dispute stems from a mandatory labeling requirement unveiled by the United States in 2009, aimed at providing consumers with more information about the safety and origin of their food.

Canada fought the so-called COOL (country-of-origin labeling) rule at the WTO saying it discriminated against Canadian products, and won. The WTO gave the United States until May 23 to comply with its rulings.

But instead Washington merely tweaked the regulation.

"Despite consistent rulings by the World Trade Organization, the U.S. government continues its unfair trade practices, which are severely damaging to Canadian industry and jobs," Fast said.

"We are preparing to launch the next phase of the WTO dispute settlement process on the new U.S. rule, which we had hoped to avoid by the United States living up to its trade obligations," he said.

In addition to trade in pigs and cattle, and meats that were the original focus of Canadian concerns, Ottawa said it may also target U.S. cheeses, apples, cherries, corn, rice, chocolate, pasta, potatoes, jewelry and wooden office furniture.